S&P warns it might cut some of Fannie Mae's ratings

A negative credit watch means there is a 50 percent chance S&P could cut the rating in the next three months.

Fannie Mae currently carries a "AAA" senior debt rating. Its risk to government, preferred stock and subordinated debt rating are all currently "AA-." The ratings could fall one notch to "A+."

The warning by S&P is in response to "Fannie Mae's continued weak core earnings and elevated mortgage credit losses," S&P analyst Victoria Wagner said in a statement.

Earlier Tuesday, Fannie Mae said it lost $2.2 billion during the first quarter. The government-sponsored enterprise also said it would raise $6 billion and cut its dividend as it struggles through the fallout from deterioration in the mortgage and real estate markets.

S&P said Fannie Mae's capital raising and retention efforts are a positive step in bolstering its capital base and should help it grow its operations.

Shares of Fannie Mae rose $1.60, or 5.7 percent, to $29.89 in afternoon trading. Shares have traded between $18.25 and $70.57 during the past year.